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African Aura announces proposed business combination with Mano River

/NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO US
NEWS WIRE SERVICES/
TSX-V: AAZ
TORONTO, April 15 /CNW/ - African Aura Resources Ltd. ("African Aura"
TSX-V: AAZ) is pleased to announce that it has entered into a legally binding
Letter of Intent ("LOI") with Mano River Resources Inc. ("Mano River" TSX-V:
MNO &amp; AIM: MANA) to conclude an agreement to merge, in order to create a
leading sub-Saharan Africa focused explorer and producer with substantial iron
and gold assets.
Highlights
- All share transaction whereby African Aura shareholders will receive
1.57 Mano River shares for each African Aura share, representing a
premium of 18.7% to African Aura's 60 day volume weighted average
share price at market close on 14 April 2009, based on Mano's AIM
price and an exchange rate of C$1.80 to (pnds stlg)1. This represents
a value of approximately C$0.099 per African Aura share.
- Merged entity to be renamed African Aura Mining Inc. which will be
initially owned 25% by African Aura shareholders and 75% by Mano
River shareholders.
- The flagship assets of the combined group will include:
- a 100% interest in the 1.4Moz new Liberty gold deposit in Liberia
(NI 43-101 compliant 13.53Mt of measured and indicated resources
grading 3.18g/t Au).
- a 38.5% interested in the 13km long Putu iron project in Liberia
being advanced by joint venture partner Severstal Resources (LSE:
SVST; RTS: CHMF).
- a 100% interest in the 12km long Nkout iron project in southern
Cameroon.
- three other gold projects at the resource drilling stage and a
significant portfolio of additional highly prospective Archaean
and Birimian gold prospects in Liberia and Cameroon.
- four uranium exploration licences in Cameroon which leverages the
company to the uranium market.
- a 60% interest in Stellar Diamonds Limited which is undertaking
hard rock kimberlite and alluvial mining activities in Sierra
Leone and Guinea.
- Subject to regulatory approval following the merger, the combined
company will continue to trade on the Toronto Venture Exchange ("TSX-
V") and the AIM market operated by the London Stock Exchange ("AIM").
- Upon completion the combined company will be a financially robust
entity with approximately C$11m/ (pnds stlg)6.0m of cash in the
treasury, a market capitalization of approximately C$26m (based on
current share prices) and a strong shareholder base of Canadian and
European institutions as well as private investors.
- The combined company will be diversified by commodity, geography and
stage of development and will represent an attractive platform for
further growth through undertaking value adding mergers and
acquisitions in sub-Saharan Africa.
- Thomas Weisel Partners International Limited, financial advisor to
African Aura's special committee, advises the proposed merger is fair
to the shareholders of African Aura from a financial point of view.
In a joint statement John Gray, President &amp; CEO of African Aura and Luis
da Silva President &amp; CEO of Mano River commented:
"We believe that the merger of African Aura and Mano River to create
African Aura Mining Inc. is a market leading transaction of two companies with
similarly strong cash positions and highly prospective assets. The transaction
is consistent with our respective corporate strategies and will provide both
of our companies with the opportunity for transformational growth. The merged
company will have an approximate cash position of C$11m/ (pnds stlg)6.0m and a
well diversified portfolio of advanced iron and gold assets in Liberia and
Cameroon. We believe these two commodities create a compelling natural hedge
for our shareholders in the current uncertain global economic climate.
Furthermore, the combination will forge a strong Board of Directors and
management team comprising individuals with notable track records in the
discovery and development of significant resources, including Guy Pas who
co-founded Addax &amp; Oryx, Afren and SAMAX which was acquired in 1998 by
Anglogold Ashanti, and David Netherway who spearheaded Afcan until it was
acquired by Eldorado Gold in 2005".
David Netherway, Chairman of African Aura, added:
"In unanimously agreeing to merge, the Boards of African Aura and Mano
River are seeking to create shareholder value by capitalizing on the numerous
corporate and exploration synergies that exist between the companies and which
will serve to reduce exploration risk by bringing together complementary
assets and technical expertise. We are confident that the resulting company
with its larger capitalization will generate enhanced news flow and be more
attractive to potential shareholders. This in turn will serve to improve the
liquidity in the merged company's shares. We plan to create shareholder value
by developing our existing assets, continuing to grow the resource base
through cost efficient exploration, undertaking appropriate cost and risk
sharing joint ventures with major partners, and by pursuing further mergers
and acquisitions in sub-Saharan Africa."
Summary of the Transaction
The LOI provides the key elements by which African Aura and Mano River
will enter a broader transaction agreement to combine the two companies
("Transaction Agreement"). The transaction is currently expected to be
structured as a merger under the corporate laws of the British Virgin Islands
(the "BVI") whereby, subject to the approval of a majority of the votes cast
by shareholders of African Aura at a shareholders meeting, a wholly-owned BVI
subsidiary of Mano River will merge with African Aura, and Mano River will
thereby acquire all of the issued and outstanding common shares of African
Aura. The consideration will be the issuance to shareholders of African Aura
of 1.57 Mano River shares (the "Exchange Ratio") for each African Aura share
they hold. This represents a value of approximately C$0.099 per African Aura
share, based on the closing price of Mano River on the AIM market on 14 April
2009 at an exchange rate of C$1.80 to (pnds stlg)1, representing a 18.7%
premium to the 60 day volume weighted average African Aura share price.
Mano River will issue 105,264,638 new shares in exchange for the
67,047,540 issued outstanding common shares of African Aura on an undiluted
basis. Former African Aura and former Mano River shareholders will account for
25% and 75%, respectively, of the common shares of African Aura Mining Inc. on
an undiluted basis.
As well, all outstanding African Aura warrants and African Aura options
will be converted into Mano River warrants and Mano River options, based upon
the Exchange Ratio pro rata to the amounts held. Upon completion of the
transaction, Mano River intends to change its name to African Aura Mining Inc.
At or prior to completion, Mano River intends to undertake a share
consolidation. Subject to regulatory approval, African Aura Mining Inc. will
trade on the TSX-V and AIM.
The proposed new Board will comprise six directors of which Mano River
will nominate four directors (namely, Luis da Silva who will serve as
President and CEO, Guy Pas, David Evans and Kirill Zimin who will each serve
as independent directors). The proposed appointment of Kirill Zimin is in
accordance with Severstal Resources' strategic investment in Mano River and
their investment in the Putu Range iron project in Liberia. African Aura will
nominate two directors (namely, David Netherway who will be appointed as
independent Chairman and Steven Poulton who will serve as an independent
director).
Board support
The financial advisor to African Aura, Thomas Weisel Partners
International Limited, has advised a Special Committee of African Aura's
independent directors that the proposed transaction is fair to the
shareholders of African Aura from a financial point of view. The Special
Committee has considered the proposed transaction and unanimously recommended
it to the board of African Aura which has determined that the transaction is
in the best interests of African Aura shareholders and unanimously approved
entering into the transaction. The board has determined to recommend that
shareholders of African Aura vote in favor of the transaction. The Board of
African Aura has also agreed to waive the application of African Aura's
shareholder rights plan in respect of the transaction. The transaction has
been approved unanimously by the Board of Directors of Mano River.
As a condition to Mano River entering into the Transaction Agreement, the
directors and officers of African Aura, who hold a total of 11.69% of the
issued share capital of African Aura, will enter into an agreement to vote in
favor of the transaction.
African Aura will convene a meeting of its shareholders for the purpose
of approving the transaction by no later than June 30, 2009. In the interim it
will prepare and mail a circular and all other required documents to African
Aura shareholders on or before June 8, 2009. The transaction is expected to
complete on or around July 15, 2009.
The obligation of Mano River and African Aura to enter into the
Transaction Agreement is subject to certain conditions precedent, including:
- Each party being satisfied, acting reasonably, of the results of its
legal, financial and technical due diligence review of the other
party;
- Obtaining any necessary consents of the TSX-V to the transaction, on
terms satisfactory to Mano;
- Each party having determined that there does not exist and has not
occurred any material adverse condition, event or development related
to the other party.
Pursuant to the LOI, African Aura has agreed not to solicit an
alternative transaction prior to the earlier of the date of execution of the
definitive Transaction Agreement or May 15, 2009. A compensation fee of
$250,000 will be payable to Mano River by African Aura in the event that,
among other events, African Aura enters into an agreement with a third party
concerning an alternative transaction prior to such date. Furthermore, in the
event that the Transaction Agreement has not be entered into on or before May
15, 2009 and either African Aura or Mano River terminates the LOI, African
Aura will be required to reimburse Mano River for all documented expenses,
costs and fees incurred by it in connection with the transaction, up to
$125,000. Completion of the transaction will be subject to customary
conditions, including a favorable vote of at least 50% of the holders of
African Aura common shares voted at a special meeting of shareholders and the
receipt of all necessary regulatory approvals.
Summary of Post Transaction Portfolio
Iron Projects
- A 38.5% interest in the Putu iron ore project in eastern Liberia held
by Mano River. Putu is currently the subject of a 27,000m diamond
drilling programme and is being funded to feasibility stage by Joint
Venture partner Severstal Resources. Results from an initial 9 holes
drilled in 2008 included a best intersection in hematite of 63m at an
average of 63.5% Fe and a best intersection in fresh magnetite of
367m at an average of 39% Fe.
- A 100% interest in the 12km long Nkout iron project in southern
Cameroon being advanced by African Aura. The project is defined by
airborne geophysical data and geological mapping, with drill testing
scheduled to commence in May 2009. Reconnaissance sampling undertaken
by African Aura along a 5km section of the prospect returned an
average grade of 54% iron and a maximum of 65% iron from hematitic
banded iron and itabarite formations.
Gold Projects
- A 100% interest in the 1.4 million ounce gold resource at the New
Liberty gold deposit in the Archaean geology of western Liberia (43-
101 compliant 13.533 million tonnes of measured and indicated
resources grading 3.18 g/t Au) being advanced by Mano River, and a
portfolio of numerous other hard rock gold projects in Liberia being
advanced by both companies. Results from a deeper drilling programme
at New Liberty in 2008 included 23m grading 4.95 g/t Au from 205m and
31m grading 3.59 g/t Au from 214m.
- A 100% interest in the Batouri gold project in eastern Cameroon being
advanced by African Aura. Sixty six holes of an initial resource
drilling programme have been completed to date which define a
significant gold stockwork system covering an area up to 500m wide
along 3 km of strike. Intersections to date include 132g/t Au over
1.0m and 49g/t Au over 1.5m.
Diamond Projects
- A 60% interest in Stellar Diamonds Limited which is producing
diamonds from underground trial mining of kimberlite dykes in the
Kono diamond fields in Sierra Leone and with full scale alluvial
production from the Mandala diamond deposit in Guinea scheduled to
commence in April 2009.
Uranium Projects
- A 70% interest in Ridgeway Energy Ltd. which holds a total of
3,480km(2) across four exploration licences in Cameroon. Mapping by
the BRGM and reconnaissance exploration by African Aura have
indicated the potential for new uranium discoveries.
About African Aura
African Aura (TSX-V: AAZ) has a 'first-mover' exploration strategy,
focused on the discovery of economic iron, gold, and uranium deposits in
sub-Saharan Africa. African Aura commenced exploration in 2004 and has
established a portfolio of exploration licences totalling approximately
9,880km(2), targeting areas of active artisanal gold mining within Archaean
greenstone and Proterozoic volcano-sedimentary belts. The portfolio includes
the 12km long Nkout iron project in southern Cameroon, the Batouri gold
project in eastern Cameroon, the Fula Camp gold project in western Liberia,
and a pipeline of significant prospects for drill testing, as well as numerous
other gold, uranium and iron ore targets that require follow up exploration.
African Aura trades on the TSX-V under the symbol AAZ. More information can be
found on line at www.african-aura.com and at SEDAR's website: www.sedar.com.
African Aura Technical Information
African Aura's Qualified Person under National Instrument 43-101
responsible for reviewing and approving this release is its Chief Operating
Officer, Mark Biddulph, who holds a BSc Hons in Geology and GIS from Rhodes
University, and a GDE in Mining Engineering (Mineral Economics) from the
University of Witwatersrand in South Africa. Mark is a Professional Natural
Scientist under the South African Council for Natural Scientific Professions
(SACNASP).
About Mano River
Mano River is an established West African exploration and development
company with a primary listing on the TSX-V (MNO) and a secondary listing on
London's AIM (MANA). Mano River is focused on the discovery of world-class
gold, diamond and iron ore deposits in the highly prospective, under explored,
West African Mano River Union countries of Liberia, Sierra Leone and Guinea.
Mano River has a highly motivated and experienced team with a record of
discovering mines and taking projects towards development and production.
Mano River's major assets are the gold deposit at New Liberty and the
Putu iron ore project, both in Liberia. In Sierra Leone, through its 60% owned
subsidiary, Stellar Diamonds, it is exploring/developing the Kono and Tongo
kimberlite dykes. In Guinea, the Mandala alluvial diamond mine is currently
being commissioned for production in April 2009. Mano River also has a number
of other promising projects which it plans to advance in the short to medium
term.
A pioneer company in West Africa, Mano River has attracted some excellent
strategic partners, particularly in iron ore and on its diamond properties,
always with the objective of preserving or enhancing shareholder value.
Mano River Technical Information
Mano River's Qualified Person under National Instrument 43-101
responsible for reviewing and approving this release is its director, Dr Tom
Elder, who holds a BSc and Doctorate in Geology from the University of Durham
in the UK, is a Fellow and former Member of Council of the Institution of
Mining and Metallurgy, and a Fellow of the Geological Society. For further
information concerning the technical data, including resource estimates,
disclosed herein, please refer to the news releases of Mano River dated
October 24, 2006 and March 19, 2009.
Forward-looking Statements
This press release includes certain Forward-Looking Statements. All
statements, other than statements of historical fact, included herein,
including without limitation statements regarding potential mineralisation and
reserves, exploration results, future plans and objectives of African Aura
and/ or Mano River, are forward-looking statements that involve various known
and unknown risks and uncertainties as well as other factors. Such
forward-looking statements include statements concerning the completion of the
transaction (including entering into the Transaction Agreement), the cash
position and market capitalization of the merged company, the merged company's
ability to complete future mergers and acquisitions, improvements to the
liquidity in trading of the merged company's shares, the merged company's
objectives and plans, and the intention of Mano River to change its name and
consolidate its shares. Such forward-looking statements are subject to a
number of risks and uncertainties that may cause actual results or events to
differ materially from current expectations, including the failure of African
Aura and Mano River to negotiate definitive agreements, and delays in
obtaining or failure to obtain required regulatory and shareholder approvals.
There can be no assurance that such statements will prove to be accurate and
actual results and future events could differ materially from those
anticipated in such statements. Any forward-looking statements speak only as
of the date hereof and, except as may be required by applicable law, African
Aura and Mano River disclaim any obligation to update or modify such
forward-looking statements, either as a result of new information, future
events or for any other reason.
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.